Implications of the AEMCs Implications of the AEMCs economic - PowerPoint PPT Presentation

Implications of the AEMC’s Implications of the AEMC’s economic regulation of network service providers draft rule for consumers Ed Willett Acting AER Chairman EUAA Annual Conference - October 2012

Topics • Rationale for the AER’s rule change proposal • Key implications for consumers from the AEMC’s draft rule

Significant Network Investment

AER’s Rule Change Proposal • The AER’s proposed rule change sought to strike an appropriate balance between the interests of network businesses and those of consumers those of consumers

AER’s Rule Change Proposal • Restrictions on the AER’s ability to revise forecast capex and opex • Insufficient safeguards against overinvestment overinvestment • Rate of return frameworks did not reflect actual financing practices • Lack of meaningful engagement with stakeholders, particularly consumers.

Key Implications of the Draft Rules • Holistic expenditure assessment • Stronger incentives for efficient investment • Consistent rate of return framework • Provisions for information and consumer • Provisions for information and consumer engagement

Greater Scope for Consumer Engagement • More time in the regulatory process for stakeholders to prepare submissions • The inclusion of overview papers with a consumer focus • Guidelines on regulatory processes • Benchmarking reports • A requirement that the AER consider the extent network businesses have consulted with customers when assessing revenue proposals